Expert: Seizure of frozen Russian assets would undermine international law

A UNSC sitting in progress.
A UNSC sitting in progress. Source: Ministry of Foreign Affairs

The state has begun to develop a legal basis for the transfer of frozen Russian assets in Estonia. While appropriating these might seem like an attractive way to help Ukraine, international law does not in general permit this, professor of international law and security at Tallinn University Tiina Pajuste said in an interview with ERR, which follows in its entirety.

What barriers in international law need to be able to be overcome in order to take possession of sanctioned Russian assets?

Under international law, the transfer of the property of a foreign country or its citizens is prohibited (states are protected by immunity, and private individuals by international investment law and human rights). This immunity of states protects them from being judged on by other states, and from the use of executive power against them (including the transfer of assets). 

In 2012, the International Court of Justice confirmed, in a case involving Germany and Italy, that a state has immunity even in the case of a serious violation of human rights or a violation of another fundamental norm of international law (for instance regarding the prohibition of the use of force).

The only scope that international law offers is the possibility of countermeasures. Countermeasures are illegal acts in and of themselves, but are justified by a previous violation by the other party. However, the use of such measures is limited, and strict conditions must be met. Countermeasures must be limited to the non-fulfilment of the international obligations of that country- in this case Estonia - implementing measures against the responsible country - in this case Russia.

Additionally, these countermeasures must be implemented in such a way that they permit the continued fulfillment of the obligations in question at a later date (in other words, the measures should be "reversible").The freezing of assets can be considered a measure which fulfills these requirements, since assets can be returned to a country that violates international law if the given country later halts its illegal activities. However, the transfer of assets, by contrast, is final in its nature.

Both international investment law and human rights regulations are key when transferring the assets of Russian citizens. International investment law prohibits the transfer of the assets of private individuals. If there is a bilateral investment treaty in place between the two countries, the individual whose property has been transferred can apply for arbitration. 

There is no bilateral investment agreement between Estonia and Russia, but several other EU countries (e.g. Lithuania, Croatia and Sweden) do have such agreements in place.

Furthermore, international human rights protect against the arbitrary confiscation of a person's property (per Article 17 of the UN's Universal Declaration of Human Rights). The removal of property from a person without due process would qualify as "arbitrary." This would mean there would be a need for legal proceedings, either at the international or the national level, to form the basis for the transfer of property.

Which institutions have the competence to allow or prohibit the transfer of Russian assets?

At the international level, the UN Security Council (UNSC) is a body that can take action in the event of a breach of international peace and security.

Unfortunately, Russia is a permanent member of the UNSC and thus has veto rights.  This means it is not realistic that the UNSC would be of help in this situation. There are examples from the past of how, in a situation where the UN General Assembly (UNGA) does not act, due to a permanent member of the Security Council's opposition; measures can be taken to restore international peace and security (General Assembly Resolution 377(V) of 1950 "United for Peace", which was used, for example, during the Suez Crisis of 1956).

Since state immunity is a highly fundamental principle of international law, while states probably do not want to weaken this principle, because doing so could threaten their assets in the future, it is not very likely that the UNGA will take action in this case .Instead, they will likely limit themselves to declarations that the use of force has taken place, and that Russia must halt this violation.

The EU, with its resources, may be able to find creative ways to interpret the current rules, but even in this case, this may still only constitute a violation of international law.

Is it viable for Estonia to transfer assets as a sole country to do so?

It would certainly not be advisable for Estonia to be the only country to start appropriating property in this way. This may lead to a situation where a legal claim against the Estonian state arises, on the basis of international law. 

Should the international community - or even the EU - not share the opinion that the legal rules allow for this transfer of property, it is not sensible to act first, in this situation. 

It is conceivable that people will look the other way and there are no repercussions, as there is a broad political will to take measures in Europe. But at the same time, in the bleakest scenario, it is possible that other countries who are interested in preserving the principles of state immunity would then take measures against Estonia.

Politicians have explained to the public the benefits the taking possession of assets would bring, but would this also lead to negative side effects in relation to international law? 

The transfer of assets is understandably a very attractive option in a situation where billions are needed to help the Ukrainian state, and for its post-war reconstruction. At the same time, billions of Russian funds have been frozen. 

The political will certainly exists both in Estonia and in the wider world. In my view as a private individual, I would certainly like the same thing to happen; unfortunately, as an expert in international law, I do not any scope for this.

The transfer of assets would lead to a number of undesirable consequences in both international relations and international law. It is likely that Russia, and those countries supporting it, would respond in kind and expropriate the assets of other states (or their citizens). 

This would lead to a general mistrust and uncertainty in international communication, and the undermining of one of the fundamental rules of international law - the immunity of states. International law as a system would also weaken. And weakened international law is certainly not in the interests either of Estonia or any other countries. Ultimately, we see in [international law] a defender of our independence.

Tiina Pajuste was talking to Mari Peegel.

The Ministry of Foreign Affairs and the Ministry of Justice have begun to develop the legal basis for the transfer of assets of the Russian Federation frozen in Estonia.

The first option is expected to be presented to the government in a month.

According to an estimate given in September last year, €350 billion would have to be spent to compensate the war damage imposed on Ukraine. 

The assets of the Russian central bank and of its oligarchs, now frozen in western countries, come to the same magnitude. So far, countries have not been able to agree on whether, and how, these frozen assets might be used for the reconstruction of Ukraine, however.


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Editor: Andrew Whyte

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